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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. The additional benefit received from the consumption of the next unit of a good or service






2. Ed = (%dQd)/(%dP). Ignore negative sign






3. Occurs when LRAC is constant over a variety of plant sizes






4. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power






5. When firms focus their resources on production of goods for which they have comparative advantage






6. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity






7. The output where ATC is minimized and economic profit is zero






8. TR = P * Qd






9. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price






10. AVC = TVC/Q






11. MUx / Px = MUy/Py or MUx/MUy = Px/Py






12. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability






13. The imbalance between limited productive resources and unlimited human wants






14. Ei > 1






15. A group of firms that agree not to compete with each other on the basis of price - production - or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits






16. The total quantity - or total output of a good produced at each quantity of labor employed






17. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply






18. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market






19. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur






20. Ed > 1 - meaning consumers are price sensitive






21. Exists if a producer can produce a good at lower opportunity cost than all other producers






22. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good






23. The additional cost incurred from the consumption of the next unit of a good or a service






24. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good






25. Ed = 8 - infinite change in demand to price change






26. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms






27. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied






28. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand






29. The sum of consumer surplus and producer surplus






30. A firm that has market power in the factor market (a wage-setter)






31. The most desirable alternative given up as the result of a decision






32. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0






33. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good






34. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.






35. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run






36. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good






37. A good for which higher income increases demand






38. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage






39. Costs that change with the level of output. If output is zero - so are TVCs.






40. All firms maximize profit by producing where MR = MC






41. Pm > MR = MC - which is not allocatively efficient and dead weight loss exists. Pm > ATC - which is not productively efficient. Profit > 0 so consumer surplus is transferred to the monopolist as profit






42. Production of the combination of goods and services that provides the most net benefit to society. The optimal quantity of a good is achieved when the MB = MC of the next unit and only occurs at one point on the PPF






43. Ed = 0 - no response to price change






44. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.






45. The lost net benefit to society caused by a movement away from the competitive market equilibrium






46. The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms - which results in lost efficiency and rising per unit costs.






47. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it






48. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product






49. Entry of new firms shifts the cost curves for all firms upward






50. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax